Jeb Bush Campaign Press Release - Backgrounder: Health Care Plan

America's health care system has long been an anachronism.  It works by payment rules, regulations and tax policies that date back to the 1940s and 1960s and have made little sense for decades.  No wonder it is expensive, complex and inaccessible.  And ObamaCare has only further entrenched and worsened its problems.  It is time to introduce health care to the 21^st century and enable the possibilities of 2025.  Governor Bush believes transformational solutions should accomplish three goals:

1. Promote innovation
2. Lower costs
3. Return power to states
   

Change and disruptive innovation happen across the American economy. Medicine itself is modernizing, despite an unusual number of barriers.  Smart phones make it possible to video chat with doctors and caregivers.  Precision medicine can personalize and more effectively treat cancer and other diseases.  3D printers can turn out replacement blood vessels, liver cells and heart valves.  Unfortunately, Washington has been micromanaging and holding back this progress, and preventing Americans from fully benefitting from it.  Instead, it should put itself on the side of transformational innovation driven by the ingenuity of Americans.

This would not only help medicine make us healthier, it is also the only strategy to bring down health care costs for hard-working Americans who see their wages suppressed, their premiums rise or their access to care prove inadequate when it matters most.

Unfortunately, ObamaCare doubled down on the 1940s and 1960s-era system.  Instead of promoting innovation, it regulates and taxes innovation.  Instead of empowering problem-solvers in the real world, it embodies the liberal ideal that Washington needs to and can solve every problem.

ObamaCare enabled Washington control of more than one-sixth of the American economy, and it confiscated citizens' ability to select a health plan, a hospital and even a doctor.  It epitomizes why Americans are so fed up with Washington.  Government inserts itself into our daily lives, fails to keep its promises, fails to recognize unintended consequences, spends trillions of dollars the country does not have, disrupts the lives of millions of Americans and leaves many worse off.  Americans are frustrated — and they have a right to be.

American families are still facing massive premium increases. American workers still cannot get the hours they need at work to make ends meet.  Four out of five Americans are now worse off under ObamaCare. By some measures, ObamaCare increased the average financial strain at every income level. While millions now have a Medicaid benefits card, they do not have coverage that gives them reliable access to care when they need it.  And even after 10 years and ObamaCare's $1.7 trillion in spending, 27 million will still be left uninsured. With Americans still suffering, the country cannot give up.

ObamaCare must be repealed and replaced.  To position American health care to make the most of the potential of transformational innovation, policy solutions should go even further to stop the damage Washington central planners have caused for decades.  Solutions should ensure that health care is centered on individuals, the consumers, and that the health care system benefits from the innovation that will make it more accessible, convenient, personal and affordable.  Some say the problem is that American health care gives the private sector too great a role, but the real story is that Washington intervention holds back value creation in the $3.1 trillion health sector.

Here are just three examples of how central planners impede value and access in America's health care system.  First, 1940s-era wage controls led to favorable tax treatment of employer-sponsored health benefits, which biases employer health coverage over individual health coverage and biases insurance over out-of-pocket spending.  Second, Medicare and Medicaid fee-for-service programs in the 1960s implemented price controls across the system.  This top-down approach drowns providers in regulations, mandates and shortsighted reimbursement cuts and leaves little opportunity for them to design more efficient and effective strategies to deliver care to seniors and the vulnerable.  Instead of focusing on outcomes and value, providers see incentives to focus on volume.  Third, government mandates and taxes — with ObamaCare representing the latest assault — force Americans to buy expensive products with benefits they do not want and may never need.  Not only does this intervention deprive individuals of the right to buy policies that fit their needs, it limits competition and innovative care options.

As president of the United States, Jeb Bush will make fixing the broken health care system one of his top priorities.  He will work with Congress to repeal and replace ObamaCare.

Governor Bush's reforms will get Washington out of the way and empower patients with more choices, security and control over their health care decisions.  These reforms will not only lower the costs of care, they will substantially lower federal spending.  They will enable a modern system that is convenient, affordable, accessible and results-oriented.

How Governor Bush's plan will help Americans

Economy: Repealing ObamaCare will add 0.7% to the American economy over five years. Repealing ObamaCare is an important part of Governor Bush's plan to enable high, sustained economic growth leading to 19 million new jobs and rising middle-class incomes.

Workers: High health care costs suppress worker wages by 2.3%.  ObamaCare has reduced the aggregate number of hours worked by 1.5%, and taken four million full-time equivalent jobs out of the economy. Governor Bush's plan will repeal ObamaCare and address the root causes of health care costs, and enable employers and workers to balance good benefits with fair wages. 

Small businesses: ObamaCare has hit small businesses with higher costs and increased complexity.  Governor Bush's plan will address the root causes of health care costs and give small businesses the option to make tax-free contributions to portable health coverage for their employees.

Middle-class Americans: ObamaCare created huge new subsidies for low-income Americans, but it left middle-income Americans facing higher premiums and higher out-of-pocket costs. Governor Bush will give individuals without an offer of job-based coverage a tax credit, regardless of income, to help cover the cost of plans that provide preventive care and comprehensive protection for high-cost medical events.  In addition, Governor Bush's plan will give middle-class Americans help with out-of-pocket costs through enhanced health savings accounts.

Individuals who rely on Medicaid: Medicaid isn't delivering patients the results they deserve.  For example, children on Medicaid end up using the emergency room as a doctor's office more than uninsured children. Governor Bush's plan will offer Medicaid patients more advanced care and better health outcomes.

Individuals with pre-existing conditions: ObamaCare's centrally-planned approach has not worked.  Governor Bush's plan will guarantee access to care for individuals with pre-existing conditions who switch to a new insurance company or move to another state.

States: Rather than crowd out innovation with Washington's myriad regulations that ObamaCare compounded, Governor Bush will give states the freedom and accountability they need to make their insurance markets more competitive and to improve care for their most vulnerable citizens.

Promote innovation in health care

Medical research has identified the molecular causes of roughly 4,000 human diseases, but treatments only currently exist for approximately 250. Alzheimer's causes suffering for seniors and their families, it is the sixth leading cause of death in America and it costs the nation $226 billion each year. Yet, Alzheimer's cannot be prevented, cured or slowed. Breast cancer is still the most common cause of cancer in women, and it kills more than 41,100 women each year. It should not cost $1.2 billion to $2.6 billion nor take 12 to 15 years to advance a medicine from discovery to patients, but that is the case under the Food and Drug Administration's (FDA) current regulatory mess. The National Institutes of Health (NIH) plays a critical role in developing basic science for new cures, but it lacks the resources to fund the most promising research.  Right now America has the highest corporate tax rate in the world, which discourages innovative companies from basing their work in America. (Governor Bush addresses this issue in his plan to grow the American economy and reform the tax code.) If the country is going to win the battle against devastating diseases, a multi-faceted strategy is needed.  The country's entire medical ecosystem must be committed.  The government must do its part, but advances will be led by the creativity and courage of America's scientists, care providers and innovators.

American entrepreneurs have achieved disruptive innovations that improve our lives, strengthen our economy and reduce the cost of living.  Think of Uber, smart phones, Twitter and Facebook.  These innovations radically increase efficiency and lower costs.  However, health care costs grow faster than any other sector of the economy and innovation lags.  Why?  Government over-regulation in health care creates high barriers to entry, adds excessive costs, fosters excessive complexity and impedes innovation.  When the government tries to "promote" health innovation, it impedes health innovation.  For example, the government spent more than $30 billion on federally-approved health information technology (IT) for physicians and hospitals, but one hospital system still cannot share patient information with another to coordinate care. And the IT systems are so complex that physicians spend less time with patients.

To fight disease and promote a culture of innovation in America, Governor Bush would adopt a multi-faceted strategy to enable the private sector to drive transformational change.

Modernize the FDA regulatory approach: Modernize the tools that the FDA uses to make scientific decisions, including biomarkers, patient-reported clinical outcomes and real-world data; accelerate clinical trials by utilizing patient data as it accumulates, rather than rigid predetermined timelines, to continuously modify and improve studies; allow manufacturers to share truthful, non-misleading scientific information and peer-reviewed clinical data with physicians and patients; and ensure that the FDA is adequately resourced to make timely approvals of safe and effective innovator and generic drugs.

Increase funding for the NIH: Increase NIH funding for research and require the Director of the NIH to submit a more robust strategic plan and biennial report on progress toward top research priorities such as Alzheimer's disease, breast cancer, autism and precision medicine.  The strategic plan will need the buy-in from researchers across the country to ensure research is targeted and coordinated.  The strategic plan should set specific and lofty goals for Alzheimer's, breast cancer and autism.  Even as investing in the NIH is critical, scarce resources do not need to fund studies on rabbit massages, how Buddhism explains the science of meditation and smartphone games to empower parents in vegetable-eating negotiations with their children. The NIH Director would also report publicly on efforts to eliminate unnecessary, duplicative research so that priorities have the resources to succeed.

Promote private sector leadership of health information technology adoption: Lead private sector collaboration, rather than government mandates, to establish national standards for electronic health record features and data interoperability; eliminate government mandates and penalties for health care providers who do not use government-approved electronic health records; protect health information from hackers and cyber attacks; and enable patient ownership of their medical history and records.  Individuals should have access to their longitudinal medical records, which will help providers offer more personalized and timely treatments for individuals.

Release patient de-identified Medicare and Medicaid data: Medicare and Medicaid patient de-identified claims data would be made more broadly available for commercial purposes in its original form (it is currently made available in processed forms).  This would allow entrepreneurs to use the biggest clinical data repository in the country to make health care more efficient and unlock quality and cost information for consumers.  For instance, entrepreneurs could evaluate the value and benefits of various treatments much more easily.

Establish a review of regulatory barriers to innovation: As outlined in Governor Bush's regulatory reform agenda, he will establish an independent commission to conduct a regulatory spring-cleaning.  As part of this initiative, the commission would undertake a top-to-bottom review of federal regulations that impede access to higher-quality and lower-cost health innovations.

Lower costs and enable portable, secure coverage for all Americans

America spends twice as much as other industrialized countries on health care as a share of our economy. At least in part, this has to do with the perverse incentives federal policy creates for excessive spending throughout the system.  The tax treatment of health insurance is one good example.  Following World War II, the Internal Revenue Service granted favorable tax treatment to health insurance offered through businesses (an indirect response to wage controls during the war).  While the employer-based system offers significant benefits (and should be protected), the tax treatment favors upfront premium payments over out-of-pocket use-based payments, such as deductibles and co-pays.  This system has distorted the meaning of "insurance" in health care — promoting high-premium, pre-payment over value-driven insurance.  Instead of protecting against high-cost events like insurance does in most sectors, third parties in health care pay the bills for common, low-cost procedures.  This results in a lack of basic price signals.  Consumers do not pay the bills for most of the medical services they receive so providers are not directly accountable to them for value.  Furthermore, insurance companies and the government control how care is delivered and how much to pay for it, leaving little opportunity for doctors, hospitals and entrepreneurs to design innovative solutions to improve value.  Until health care is oriented around consumers, providers and innovation, Americans will not get better value and results out of the health care system.

A well-functioning, portable individual market is critical to meeting the needs of a 21^st century workforce.  At the same time, employer-sponsored health insurance represents a strong coverage platform for 154 million Americans — the largest source of private coverage. This market has recently yielded innovations in health care — despite ObamaCare.  For example, defined contributions to private exchanges use robust competition to give workers real choices, responsibility and ownership of their health plans.  Employers and workers should have the tools they need to lower health care costs and realize higher wages.

To lower costs and create portable, secure health coverage for all Americans, Governor Bush would:

Provide a tax credit to those who do not have employer coverage: Individuals who do not get coverage through their employer should also get a tax break on their individual health insurance purchase.  Governor Bush would make available an advanceable, refundable tax credit for health care to those individuals as a matter of fairness.  The value of this credit would:

• Be based on the average tax benefit that workers who get coverage through their jobs enjoy;
• Help Americans access a basic level of preventive benefits and protect them from losing their life savings over a major medical event;
• Be adjusted by age (so that it is more valuable for older Americans who may face higher premiums); and
• Grow with inflation each year.

This would facilitate more portable and secure coverage over time.  The credit would be available to Americans under age 65, regardless of income, who do not have an offer of employer-sponsored insurance.  Instead of ObamaCare subsidies that go to insurance companies, these tax credits would go directly to individuals.  Whatever portion of the credit is not used to cover insurance premiums could be deposited into a Health Savings Account (HSA).  States would have the resources to supplement the value of the credit for low-income and vulnerable Americans.

Increase contribution limits and uses for HSAs: HSAs can be used by individuals to pay for out-of-pocket costs like physician or hospital visit co-pays.  Governor Bush would allow individuals to make higher tax-free contributions to HSAs, up to $6,550 vs. $3,350 today.  $6,550 represents the full out-of-pocket exposure (deductibles and co-pays) on an HSA-qualified health plan.  Employers could continue to make contributions to employee HSAs as well.  This means that consumers with high-deductible plans will be able to fully pay for out-of-pocket expenses with pre-tax dollars.  In addition, HSAs could be broadened and used for more health-related purchases like over-the-counter drugs.  High-deductible plans could also be tailored for those with complex conditions, offering comprehensive care management options below the deductible.  This will encourage more individuals to adopt HSAs (about 18 million currently use them), turning them into value-conscious consumers.

Facilitate transparency on costs and outcomes: As consumers control more of their own health care decisions, they deserve better transparency about the value of their care.  Governor Bush proposes transparency standards so that consumers have access to key information on price, outcomes and performance.  For example, Florida has a website that allows consumers to compare charges and lengths of stay for hospitals across the state. This would include making simple information available about the physician and hospital networks available in insurance policies — before individuals sign up for coverage.

Allow employers to give financial incentives to employees who make healthy lifestyle choices: Employers offer health care benefits to more than 154 million Americans and are using innovative strategies to identify chronic conditions early and treat them in order to improve health and reduce unnecessary costs.  This is something that should be protected.  However, complicated and conflicting new government regulations are disrupting the ability of employers to offer common-sense financial incentives to reward healthy behaviors.  Governor Bush would make it clear that offering a reward for healthy behaviors can be done.  This would free employers to design health promotion and chronic disease management programs that have shown promise in helping employees lead longer, healthier lives.

Allow small businesses to make tax-free contributions to individual health plans: Small businesses that cannot afford to provide insurance now cannot make a tax-free contribution to health plans that their employees purchase in the individual market without facing huge penalties.  Governor Bush would enable employers to make tax-free contributions to Health Reimbursement Accounts or HSAs so that their employees could purchase portable, individual market insurance policies.  (For this purpose, the contribution limit for an HSA would be higher than $6,550.)  This would allow small businesses to help their employees obtain health benefits, if they cannot afford the costs or complexity of offering the policy itself.

Cap the employer tax exclusion: Governor Bush would allow individuals a $12,000 ($30,000 for family plans) tax break on the value of their health insurance obtained through their employers (the value of the cap would grow with inflation each year).  This will encourage employers to offer lower-cost plans, but also allows employees to choose the benefits that best suit their needs.  This would replace ObamaCare's complex and onerous "40% tax," which forces employers to arbitrarily reduce benefits to avoid the tax and thus limit the benefits employees may want and need.  Even economists on the left believe that this policy would reduce spending without harming health outcomes. Further, this policy would allow employers and employees to balance the need for good benefits and increased wages.

Take health care control out of Washington and return it to states

ObamaCare included unprecedented and costly federal regulation of state insurance markets.  For instance, individual market plans must comply with ObamaCare's costly "essential health benefits" mandates.  In addition, states have to comply with a litany of rules in operating their low-income health programs and undergo a lengthy waiver process if they want to make innovative changes to improve care.  Different rules for ObamaCare, Medicaid and the Children's Health Insurance Program make state approaches to vulnerable populations uncoordinated and cumbersome.

The most responsive and effective care is best delivered locally.  Patients, physicians, nurses, therapists and other health care providers live, practice, treat and collaborate in communities of care.  Thus, for states to meet the needs of all its citizens, states must have responsibility to make their individual insurance markets more competitive, enhance access to care and enable community-based solutions for low-income and vulnerable Americans.  Instead of Washington standardization, this emphasizes transparent outcome standards.

Instead of multiple federal funding streams and sets of rules, states would present a plan to receive comprehensive and capped federal allotments.  This funding could be used to provide affordable care for individuals with pre-existing conditions, the vulnerable and low-income populations.  In return for this streamlined federal funding, states would be responsible to meet transparent metrics.

To ensure states have the resources, ability and accountability to implement local solutions, Governor Bush would:

Restore state regulation of competitive insurance markets: States receiving federal funding would have to meet the following metrics:

• Reform their insurance markets and allow insurers to offer an affordable, catastrophic plan. Individuals would be free to choose plans with richer benefit designs, but this reform would give that choice back to individuals to select the plan that meets their needs. This would enable a new market where insurers could offer plans with premiums equal to the newly-created tax credit, and therefore with no upfront out-of-pocket costs for individuals — allowing everyone to afford coverage that would protect them against high-cost medical events.
• Ensure access to affordable policies for individuals with pre-existing conditions. States would be held accountable to ensure access for individuals with pre-existing conditions. Such arrangements could require insurers to issue coverage to those who have maintained continuous coverage, establish well-funded high-risk pools, establish reinsurance arrangements or provide for risk adjustment among insurers who sell in the states.  The federal government would hold states accountable for results and could provide technical assistance for a range of approaches to achieve the results.  Until states implement a workable solution, there will be a federal continuous coverage protection.  If an individual has maintained health insurance, they cannot be denied coverage when moving to a new state or changing insurance.
• Ensure access to affordable health care. States would report on access to care, including catastrophic coverage or population health outcomes. This would pave the way for provider-led care models, such as local hospitals or physicians offering primary care clinics and medical homes.  (Federal funding could not be used for a Medicaid fee-for-service expansion.)
• Develop an action plan to reduce the growth of health care costs. States would need to develop an evidence-based action plan to address costs under their control, such as medical liability reforms or reforming payment models to focus on outcomes.
• Develop a transition plan for the more than 17 million low-income individuals entangled in ObamaCare. For example, states could supplement the new tax credit so that low-income individuals have a fully funded HSA to meet all of their out-of-pocket costs.

Create accountability for better care and outcomes for low-income and the vulnerable:

The Medicaid program today may offer a benefits card to enrollees, but it does not achieve the health outcomes that vulnerable patients need or provide reliable access to physicians.  The Oregon Health Insurance Experiment found that Medicaid eligibility made little difference in health outcomes. This failure is unacceptable.  During the next president's first term, the country will spend more than $700 billion a year on Medicaid, and Americans must demand results for their fellow citizens. As a condition of funding under this proposal, states would have the resources and tools to focus on population health outcomes.  Rather than all of Medicaid's bureaucratic rules and regulations, states could use the capped allotments to implement solutions such as:

• Premium assistance for low-income individuals around the new federal tax credit for low-income individuals
• Individualized, community-based and innovative benefit designs (e.g., value-based insurance designs tailored for high-risk individuals, expanded primary care, consumer-driven benefit designs and incentives for healthy behavior)
• Coordinated care for individuals with behavioral health conditions and the disabled
• Tailored care delivery to reflect the diversity of state populations
• Personalized care management solutions for high-risk, high-need individuals, by leveraging proven data analytics and information tools
• Work requirements for able-bodied individuals
• Outcomes transparency and value-based payment designs
• Blended funding from various programs to better coordinate care (e.g., child welfare and dually-eligible populations)

This policy would not regulate the approaches states decide to take, but it would hold states accountable for outcomes since they are receiving federal funding.  This reflects requests from a majority of the nation's governors as they seek to provide affordable, high-quality care for their most vulnerable citizens. States would receive a single allotment, based on the number and risk profiles of vulnerable and low-income individuals in their populations, and this would grow at the rate of inflation.

Additional policies

Apply the Hyde Amendment, an important policy to protect innocent human life that has been supported by Republicans and Democrats alike for nearly four decades, to funding and tax credits provided under this proposal.

Implement conscience protections, so health care providers can practice medicine in ways that do not violate their moral or religious convictions.

Readopt the "Reagan rule" to prevent Title X taxpayer dollars from going to entities that provide or refer for abortions.

Enable states to stop Medicaid funding of organizations that provide or refer for abortions by clarifying that states have this discretion over how they operate their Medicaid programs.

Strengthen and secure Medicare

Governor Bush will release a separate plan to strengthen and secure Medicare.

Conclusion

ObamaCare promised to fix a broken health care system; but instead, it doubled down on the status quo and left millions of Americans, particularly middle-income families, worse off.  This proposal takes the opposite approach.  It repeals Washington's power grab, empowers individuals with choice and security and allows the states to design their own solutions.  Instead of assuming the government can solve every problem, it establishes a fair, vibrant and transparent market for entrepreneurs to design innovative solutions to lower costs and improve access to care.  This proposal will move us from a system stuck in 1965 to one that empowers individuals and embraces the future.